JAMES L. KINGTON AND DON EARNEY, PETITIONERS V. UNITED STATES OF
AMERICA
No. 86-1199
In the Supreme Court of the United States
October Term, 1986
On Petition for a Writ of Certiorari to the United States Court of
Appeals for the Fifth Circuit
Brief for the United States in Opposition
TABLE OF CONTENTS
Questions Presented
Opinion below
Jurisdiction
Statement
Argument
Conclusion
OPINION BELOW
The opinion of the court of appeals (Pet. App. A1-A11) is reported
at 801 F.2d 733. The opinion of the district court (Pet. App. B2-B7)
is unreported.
JURISDICTION
The judgment of the court of appeals was entered on October 3,
1986. A petition for rehearing was denied on November 12, 1986 (Pet.
App. C1-C2). The petition for a writ of certiorari was filed on
January 9, 1987. The jurisdiction of this Court is invoked under 28
U.S.C. 1254(1).
QUESTIONS PRESENTED
1. Whether 18 U.S.C. (& Supp. III) 3731 authorizes the government
to appeal a suppression order that is entered after the jury in the
first trial has been discharged but before a second trial has begun.
2. Whether bank records obtained by FBI and IRS agents pursuant to
grand jury subpoena may be suppressed because the grand jury was given
summaries of the records rather than the records themselves.
STATEMENT
1. Petitioners are the former president and vice-president of the
now-defunct Abilene National Bank in Abilene, Texas (Pet. App. A4).
In July 1983, a federal grand jury subpoenaed certain records of the
bank (ibid.; id. at F1). The bank delivered the records to agents of
the Federal Bureau of Investigation (FBI) and the Internal Revenue
Service (IRS), who in turn prepared and presented summaries of the
records to the grand jury (id. at A4, F1-F2). After reviewing the
summaries, the grand jury returned a 53-count indictment against
petitioners. The indictment charged them with misapplication of bank
funds, in violation of 18 U.S.C. 656, falsifying a loan application,
in violation of 18 U.S.C. 1005, causing a bank to fail to report a
currency transaction over $10,000, in violation of 31 U.S.C. (1976
ed.) 1059 and 1081, and filing a false income tax return, in violation
of 26 U.S.C. 7206(1). Pet. App. A4.
Prior to trial, petitioners moved to suppress the subpoenaed bank
records (Pet. App. A4). They claimed, among other things, that the
government violated the Right to Financial Privacy Act of 1978, 12
U.S.C. (& Supp. III) 3401-3422, when it presented the grand jury with
summaries of the subpoenaed records prepared by the FBI and IRS
agents, rather than the subpoenaed records themselves (Pet. App. A4).
After selecting and swearing the jury, the district court conducted a
three-day hearing on the suppression motion (ibid.).
Near the end of the suppression hearing, the district court engaged
in the following colloquy with defense counsel (Tr. 145-148; Pet.
App. F8-F10):
THE COURT: * * * Now, I discussed with you gentlemen the
proposition of the dilemma I find myself on double jeopardy. In
the event * * * that I were to suppress this evidence, would the
defendants be in a position to waive any claim of double
jeopardy in case my ruling were reversed?
* * * * *
MR. KRAGE: I speak for Mr. -- the defendant, Mr. James L.
Kington, Your Honor. I can tell you that the defendant, Mr.
Kington, is willing to, in response to your -- to a possible
order that would be favorable on the motion, that if such an
order is made by the court suppressing evidence in this case or,
alternatively, dismissing this case because of abuse of grand
jury process, that Mr. Kington will waive his double jeopardy
claim if the government has an appropriate vehicle to appeal,
they do decide to appeal, and this waiver is only if they do
appeal, not for reindictment, your honor, only if they do appeal
this ruling, and I want to make that clear.
THE COURT: Well, and the appeal -- my ruling would have to
be reversed, of course.
MR. KRAGE: Of course. If it is reversed and remanded for
trial, we waive the issue of double jeopardy as a result of the
second trial to the extent that any jeopardy may have already
attached from the impaneling of this jury, and this waiver is
made knowingly, intelligently, and freely.
THE COURT: Mr. Kington, do you agree with this?
MR. KINGTON: Yes, Your Honor.
THE COURT: Counsel on behalf of plaintiff Earney?
MR. RICHARDS: On behalf of Mr. Earney, please the court, I
would state to the court that I have discussed this particular
issue with Mr. Earney concerning double jeopardy and have
explained to him, that I would concur in the stipulation of the
co-counsel, Mr. Krage, and that we would waive double jeopardy
in this particular situation if the court so -- would that be
your testimony Mr. Earney?
MR. EARNEY: Yes, sir.
THE COURT: Mr. Earney, do you agree with the waiver?
MR. EARNEY: Yes, sir.
* * * * *
THE COURT: But now my understanding is, clear understanding
is, that neither of these defendants will claim that they can't
be tried in this case in the event that I rule suppressing the
evidence and an appellate court reverses that ruling.
MR. RICHARDS; Yes, sir.
MR. KRAGE: Yes, your Honor.
The court then indicated that at some future time it would enter a
formal order suppressing the evidence and that the government's time
for appeal would start to run upon the entry of that written order
(Tr. 149; Pet. App. F11).
2. After the hearing, the court discharged the jury (Pet. App. A4).
Approximately three weeks later, the court entered its formal opinion
and order suppressing the bank records (ibid.). In its opinion, the
court noted that 12 U.S.C. 3420(1) provides that "(f)inancial records
about a customer obtained from a financial institution pursuant to a
subp(o)ena issued under the authority of a Federal grand jury * * *
shall be returned and actually presented to the grand jury" (Pet. App.
B4-B5), and that "summaries alone are not sufficient for the grand
jury to return an indictment" (id. at B5). Accordingly, the court
held that "the use of said subpoenaed documents in the trial of that
case on the merits will not be permitted" (ibid.).
3. The court of appeals reversed (Pet. App. A1-A11). In response
to petitioners' argument that 18 U.S.C. (& Supp. III) 3731 barred the
government's appeal (Pet. App. A4-A6), the court held that that
statute forbids an appeal by the United States from a suppression
order only when the order is entered during trial (id. at A5). In
this case, the court noted, the government appealed from the "district
court's suppression order that was entered three weeks after the
district court had ended the trial by discharging the jury" (ibid.).
In response to petitioner's argument that suppression is appropriate
because of the failure of the grand jury to receive the bank records,
rather than mere summaries of those records, the court determined that
"'neither the Fifth Amendment nor any other constitutional provision
prescribes the kind of evidence upon which grand juries must act'"
(id. at A8, quoting Costello v. United States, 350 U.S. 359, 362
(1956)), that "bank customers have no legitimate * * * expectation of
privacy in the records of their accounts maintained by banks" (Pet.
App. A9, citing United States v. Miller, 425 U.S. 435 (1976)), and
that "Congress apparently did not intend suppression as a remedy for
violation of (12) U.S.C. 3420" (Pet. App. A10).
The court of appeals agreed with the district court that the
government violated Section 3420(1) by failing to transfer control
over the records to the grand jury (Pet. App. A10). /1/ The court
found, however, that "(t)he question remains whether a penalty for
this violation is available" (ibid.), and that the statutory penalties
set forth in the Right to Financial Privacy Act are "inapplicable 'to
any subpoena or court order issued in connection with proceedings
before a grand jury'" (ibid., quoting 12 U.S.C. 3413(i)).
Accordingly, the court held that a violation of Section 3420 is
subject only to "the same penalties as are other violations of Rule 6"
of the Federal Rules of Criminal Procedure, to wit, contempt sanctions
(Pet. App. A10-A11).
ARGUMENT
The decision below is correct. It does not conflict with any
decision of this Court or of any other court of appeals. Accordingly,
review by this Court is not warranted.
1. Petitioners first contend (Pet. 7-14) that the court of appeals
erred in holding that the Criminal Appeals Act, 18 U.S.C. (& Supp.
III) 3731, authorized the government's appeal of this suppression
order. Petitioners' contention is meritless.
Section 3731 provides, in pertinent part, that the government may
appeal any suppression order "not made after the defendant has been
put in jeopardy and before the verdict or finding on an indictment or
information * * *." In interpreting this provision, this Court has
stated that "(t)he legislative history of 18 U.S.C. Section 3731
'makes it clear that Congress intended to remove all statutory
barriers to Government appeals and to allow appeals whenever the
Constitution would permit'" (United States v. Loud Hawk, No. 84-1361
(Jan. 21, 1986), slip op. 10, quoting United States v. Wilson, 420
U.S. 332, 337 (1975)). Thus, the courts of appeals have construed 18
U.S.C. (& Supp. III) 3731 to authorize appeal of any suppression
order, as long as the appeal is not barred by the Double Jeopardy
Clause and does not interrupt an ongoing trial. See, e.g., United
States v. Posner, 764 F.2d 1535, 1538 (11th Cir. 1985), aff'd on
appeal from remand, 780 F.2d 1536 (1986) (allowing appeal from an
order denying a motion to reconsider a midtrial suppression ruling
that was entered after the first trial resulted in a mistrial);
United States v. Margiotta, 662 F.2d 131, 141 & n.26 (2d Cir. 1981),
cert. denied, 461 U.S. 913 (1983) (same); United States v. Shears,
762 F.2d 397, 399-400 (4th Cir. 1985) (allowing appeal of a pretrial
suppression ruling after the first trial ended in a mistrial and the
second trial had not begun); United States v. Layton, 720 F.2d 548,
553-554 (9th Cir. 1983), cert. denied, 465 U.S. 1069 (1984) (same);
United States v. Harshaw, 705 F.2d 315, 318-319 (8th Cir. 1983)
(allowing appeal from a midtrial suppression ruling that was followed
by the declaration of a mistrial).
Here, of course, the government's appeal was not barred by the
Double Jeopardy Clause and did not interrupt an ongoing trial.
Petitioners waived any double jeopardy objections they may have had in
order to encourage the district court favorably to decide their
suppression motion. The court then discharged the jury, thus ending
the first trial, and it resolved the suppression motion before
starting a second trial. It was at that point that the government
filed its notice of appeal. Accordingly, the court of appeals was
correct in holding that 18 U.S.C. (& Supp. III) 3731 authorized the
appeal. /2/
Petitioners err in suggesting (Pet. 7-8) that the court's decision
conflicts with the Sixth Circuit's decision in United States v.
Payner, 572 F.2d 144 (6th Cir. 1978). In that case, the district
court suspended a bench trial so that the government could appeal a
midtrial evidentiary ruling; the court indicated that it would render
its verdict only after the Sixth Circuit had decided the suppression
issue on appeal. 572 F.2d at 145. The Sixth Circuit held that 18
U.S.C. (& Supp. III) 3731 barred the appeal, but only because the
trial was ongoing. Here, there was no ongoing trial. Thus, the
decisions are not in conflict.
Nor is there a conflict between the decision below and any of the
other cases that petitioners cite. See Pet. 8, 12-13. In Sanabria v.
United States, 437 U.S. 54, 68-69, 75-78 (1978); United States v.
Lucido, 517 F.2d 1, 2-3 (6th Cir. 1975), and United States v. Ember,
726 F.2d 522, 525 n.6 (9th Cir. 1984), the courts held only that the
government cannot appeal a judgment of acquittal; those cases are
inapposite because no judgment of acquittal is involved here. In
United States v. Fatico, 579 F.2d 707, 710-711 (1978), aff'd after
remand, 603 F.2d 1053 (2d Cir. 1979), cert. denied, 444 U.S. 1073
(1980), the court held that 18 U.S.C. (& Supp. III) 3731 permits the
government to appeal a post-trial order that excludes evidence from a
sentencing hearing; that decision is entirely consistent with the
decision in this case allowing an appeal from a suppression order
entered between trials. The court in United States v. Taylor, 792
F.2d 1019, 1025 (11th Cir. 1986), petition for cert. pending, No.
86-5746 (filed Sept. 22, 1986), refused to permit a defendant to file
a mid-trial motion to suppress evidence, on the ground that any appeal
by the government would interrupt an ongoing trial; by contrast, this
case involves a suppression order entered after an initial trial has
ended. Finally, the court in United States v. Kane, 646 F.2d 4, 6-7
(1st Cir. 1981), held only that 18 U.S.C. (& Supp. III) 3731 does not
authorize the government to appeal a pretrial discovery ruling; this
case involves a pre-trial suppression ruling, which is precisely the
type of ruling to which 18 U.S.C. (& Supp. III) 3731 applies.
Petitioners' discussion (Pet. 8-11, 13) of the "plain language" and
legislative history of Section 3731 misses the point. The language
and legislative history provide only that the government may not
appeal a suppression order rendered during an ongoing trial. They do
not suggest that the government may not appeal a suppression ruling
made bewteen separate trials. Petitioners forget that the very
purpose of Section 3731 was to facilitate the government's appeal of
such orders. See United States v. Harshaw, 705 F.2d at 319.
2. Petitioners next contend (Pet. 15-17) that the court of appeals
erred in holding that suppression is not a permissible remedy for the
violation of the Right to Financial Privacy Act that occurred here.
This contention is also in error.
In the Right to Financial Privacy Act, Congress provided that,
except where bank records are obtained pursuant to grand jury subpoena
or search warrant, information pertaining to a customer's account may
not be disclosed without advance notice to the customer or without the
customer's consent. 12 U.S.C. 3402-3405, 3407-3408. The act sets
forth in detail the remedies that are available for violations of
these provisions. See 12 U.S.C. 3417. The remedies include awards of
costs, damages, and disciplinary actions. But they do not include
suppression of bank records. And even these remedies do not apply to
violations of 12 U.S.C. 3420(1), the statutory provision that the
government was found to have violated in this case.
As the court of appeals noted (Pet. App. A9-A10), the omission of a
statutory suppression remedy for a violation of Section 3420(1) is
quite significant. In United States v. Miller, 425 U.S. 435 (1976),
this Court held that bank customers do not have Fourth Amendment
privacy rights in records that banks maintain concerning their
customers' accounts. Accordingly, the Court refused to suppress bank
records that the government had obtained by means of a defective grand
jury subpoena. In response, Congress enacted Section 3420(1),
imposing certain statutory restrictions on the use of bank records.
But, in doing so, Congress did not provide bank customers with a right
to suppress bank records that are unlawfully used or obtained. In
such circumstances, the courts may not engraft a suppression remedy
onto the Act. United States v. Frazin, 780 F.2d 1461, 1466 (9th Cir.
1986); cf. United States v. Caceres, 440 U.S. 741, 755-757 (1979)
(refusing to suppress evidence obtained in violation of an IRS
regulation).
Petitioners' contention (Pet. 15-16) that the Right to Financial
Privacy Act gives bank customers an expectation of privacy does
nothing to support the case for suppression. /3/ The alleged
violation in this case -- failing to give the grand jury physical
custody of the bank records -- did not in any way increase the
invasion of privacy that any bank customer suffered as a result of the
grand jury subpoena in this case. The IRS and FBI agents were clearly
authorized to read and summarize the bank records; their failure to
convey those records to the grand jury simply reduced the total number
of persons to whom the records were disclosed.
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
CHARLES FRIED
Solicitor General
WILLIAM F. WELD
Assistant Attorney General
PATTY MERKAMP STEMLER
Attorney
MARCH 1987
/1/ By contrast, the court disagreed (Pet. App. A6-A8) with the
district court's conclusion (Pet. App. B5-B7) that 12 U.S.C. 3420
requires bank officials themselves to deliver subpoenaed bank records
to the grand jury.
/2/ The court of appeals did not hold, as petitioners suggest (Pet.
11-12), that petitioners' waiver conferred jurisdiction on it.
Rather, petitioners' waiver ensured that the Double Jeopardy Clause
could not be asserted to bar an appeal that was otherwise authorized
by 18 U.S.C. (& Supp. III) 3731.
/3/ Petitioners are plainly wrong in contending (Pet. 16) that
suppression is required because their expectation of privacy is of
constitutional magnitude. As noted above, Congress understood that
the privacy right it was creating extended beyond the scope of the
rights established by the Constitution. See H.R. Rep. 95-1383, 95th
Cong., 2d Sess. 34 (1978). In any event, suppression is a remedy only
for violations of clearly established constitutional privacy rights
(see United States v. Leon, 468 U.S. 897, 906 (1984)), which this
privacy right clearly is not.